HARIPRASAD SHIVSHANKAR SHUKLA v. A. D. DIVIKAR

Citation: [1957] 1 S.C.R. 121; 1956 INSC 72

Court: Supreme Court of India

Bench: SUDHI RANJAN DAS, NATWARLAL HARILAL BHAGWATI, T.L. VENKATARAMA AIYYAR, S.K. DAS, P. GOVINDA MENON

Judgment date: 1956-11-27

Case summary

1956 INSC 72. Supreme Court of India judgment dated 1956-11-27. HARIPRASAD SHIVSHANKAR SHUKLA v. A. D. DIVIKAR. Read the judgment and case details on...

Judgment text

S. C. R. SUPREME COURT REPORTS 121 HARIPRASAD SHIVSHANKAR SHUKLA v. A. D. DIVIKAR (With Connected Appeal) (S. R. DAS c. J. , BHAGWATI, VENKATARAMA AYYAR, S. K• DAs and Gov1NDA MENoN JJ. ) Industrial Dispute-'Retrenchment', Meaning of-If includes termination of service on bona fide closure of industry or change of 011Jnership or management-Construction of statute-lndusn·ial Disputes Act (XIV of 1947), as amended by Act XLl/I of 1953, ss. 2(00), 25F. The word 'retrenchment' as defined in s. 2(00) and the word 'retrenched' in s. 25F of the Industrial Disputes Act, 1947, a~ amended by Act XLIII of 1953, have no wider meaning than the ordinary accepted connotation of those words and mean the discharge of surplus labour or staff by the employer for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, and do not include termination of services of all workmen on a bona fide closure of industry or on change of ownership or management thereof.

Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills Mazdoor Union (1956] S. C. R. 872, followed. Burn & Co. , Calcutta v. Their Employees (1956] S. C. R. 781, referred to. The provisions of the Act have in view an existing and continuing industry and els. (a), (b) and (c) of the definition only exclude certain categories of termination of service from within its ambit but do not indicate what arc to be included therein. The word 'retrenchment' has acquired no special meaning so as to include a discharge of workmen on a bona fide closure of an industry, as a result of certain Labour Appellate Tribunals awarding compensation to workmen on such closure as an equitable relief for a variety of reasons. The intention of the legislature in enacting s. 25F of the Act appears to have been to simplify and standardise the payment of compensation for retrenchment, as ordinarily understood, on the basis of the length of service ·of the retrenched workman. The Hyderabad Vegetable Oil Products. Ltd.

v. Their Workers (1950] 2 LL. J. 1281, Employees of Messrs. India Reconstruction Corporation [1953] L. A. C. 563 and Kahdan Tcrtiles Ltd. v. Their Workers [1954] 2 LL. J. 249, considered. Section 25FF, which was inserted into the Act by the amending Act of 1~56, is not retrospective and does not apply to the instant 16 1956 Hari""4111l SAiv- sharikar Shukla Y. A. D. Di•ikar 122 SUPREME COURT REPORTS [1957] cases, and the object the legislature had in view in enacting the same was to partially nullify the effect of certain judicial decisions relating to the effect of a change of ownership or management and it was not intended to be a parliamentary exposition of the pre~ existing law. The language of item JO of the third an~ fourth scho. dules, engrafted into the Act by s. 29 of the Industrial Disputes (Amend- ment and Miscellaneous Provisions) }\ct, 1956, indicates that the legislature envisaged a distinction between retrenchment and closure and the former does not include the latter.

Although on such construction, s. 25F applies only to an e. -xisting industry and s. 25FF becomes 13rgely redundant, no question of any hardship arises as the judicial decisions on the basis of which s. 25FF was enacted \~:ere themselves incorrect and must be overruled, In construing a parliamentary statute the time when and the circn1nstance. " in which it \Vas enacted may be taken into considera- tion and the general principle of parliamentary exposition or subsequent legislation as "an aid to construction of prior legislation, can have no application where the subsequent statute itself was based on incorrect assumptions and judicial decisiOns b. 1sed on such assumptions. Great Northern Railway v. United States of America, 315 U. S. 262 and Ormond Investment Co. Limited v. Betts [ 1928] A. C. 143, referred to. If the other conditions of the definition clause are fulfilled, the transfer of o\vnership or management of an ind. ustry and its closure st.

1nd on the same footing so far as the definition clause is con- cerned, notwithstanding that there is a distinction in fact between the two ; there is, however, no retrenchment within the meaning of the definition clause unless there is a discharge of surplus labour or staff by the employer in a continuing industry, for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action. · Consequently, in the instant cases, where in one the services of all the . workmen were terminated by the employer on a real and bona fide closure of the industry and in the other on a change of ownership, such termination did not amount to retrenchment within the meaning of s. 2( 00) or s. 25F of the Act and the appellants were not bound to pay any compensation under cl. (b) of s. 25F of the Act. CIVIL APPELLATE JUR1so1crtoN : Civil Nos. 103 & 105· of 1956.

Appeals Appeal from the judgment and order dated January 24, 1955, of the Bombay High Court in Special Civil Application No. 2546 of 1954. S. C. R. SUPREME COURT REPORTS 123 N. A. Palkiwala and /. B. Dadachanji, S. N. Andley and Rameshwar Nath, for appellants in Civil Appeal No. 103 of 1956. M. C. Setalvad, Attorney General for India, C K. Daphtary, Solicitor-General for India, Porus A. Melita and R. H. Dhebar, for respondents. S. M. Bose, Advocate-General of West Bengal, N. A. Palkiwalu, /. B. Dadachanji, S. N. Andley and RameshttJar Nath, for the appellant in Civil Appeal No. 105 of 1956 Rajini Patel, ll-1. V. Jayakar , and /. N. Shroff, for respondent No. 11 . Porus A. Mehta and R. H. Dhebar, for respondents Nos. 4 & 5. 1956. November 27. The Judgment of the Court was delivered by S. K. DAs J. -These two appeals, brought on certifi- cates granted by the High Court of Bombay, raise common questions of law and for that reason, have been heard together.

This judgment will govern them both. CIVIL APPEAL No. 105 OF 1956. In Civil Appeal No. 105 of 1956 the main appellant is th~ Barsi Light Railway Company Limited, Kurdu- wadi, within the State of Bombay (hereinafter called the Railway Company). The principal respondent is the President of the Barsi Light Railwaymen's Union, respondent No. I to the appeal. The General Manager, Central Railway, Bombay, and the Secretary, Railway Board, New Delhi, are respondents Nmt 4 and 5. The facts, so far as they are relevant for our purpose, are these. Under an agreement dated August 1, 1895, between the Secretarv of State for India in COuncil and the Railway . COmpany, the latter constructed, maintained and worked a light railway between Barsi Town and Barsi Road Station on the railway system, known then as the Great Indian Peninsular Railway. It is not necessary to state here the various clauses of the aforesaid indenture of agreement except to mention •95f' Haritrrzsad Slii. - sMnkar S! wkla v.

A. D. Divikar 1956 Hariprasad Shiv- sMnkar Shukla v. A. D. Divikar S. IC Dar J. 124 SUPREME COURT REPORTS [1957} that it contained a clause under which the Secretary of State' could purchase and take over the undertaking after giving the Railway Company not less than twelve calendar months' notice in writing of the intention so to do. On December 19, 1952, a notice was given to the Railway Company, for and on behalf of the Presi- dent of India, by the· Director of the Railway Board to the effect that the undertaking of the Railway Company would be purchased and taken over as from January 1, 1954. The notice stated inter alia : "The President of India hereby gives this notice to the Company of the determination of the original contract of the 1st day of August, 1895, and the contract of. 'the 26th day of August, 1902, between the Secretary of State in Council and the Barsi Light Railway Company Ltd.

, and of all the contracts supplemental thereto, at the expiration of 12 calendar months next after the current month and the contracts shall termi- nate accordingly on the expiration of 12 calendar months next after the current month and the President of India will on the lst day of January, 1954, purchase and take over the entire railway system of the Company including all the extension and all the railways together with all its rolling stock, machinery, equipments buildings and property etc. , and together with all other things, stores and fixtures etc. , as specified and in the manner provided in clause 43 of the Indenture of the 1st August, 1895, and in clause 63 of the Indenture of the 26th August, 1902.

" On November 11, 1953, the Railway Company served a notice on its workmen int1matmg that as a result of the Government of India's decision to terminate the contract of the Railway Company and take over the railway from January 1, 1954, the services of all the workmen of the Railway Company would be terminated with effect from the afternoon of December 31, 1953. The notice further stated that the Government of India intended to employ such of the staff of the Company as would be willing to serve on the railway on terms and conditions which were to be notified later. On December 15, 1953, the Railway Board intimated the terms and conditions S. C. R. SUPREME COURT REPORTS 125 on which the staff of the Railway Company would be taken over and employed by Government.

The letter by which the terms and conditions were communicated enclosed three forms-one for clerical and like cate- gories, a second for categories of staff needing training or refresher course, and a third for workshop staff and other tradesmen requiring trade-testing. In substance, the new terms and conditions as embodied in the letter and the three forms stated that the service of the staff employed by Government would be treated as con- tinuous for certain specific purposes only, such as, contribution to prov1dent fund, leave, passes and privilege ticket orders, educational and medical facilities etc. It was made clear, however, that the Government Railway rules applicable to other staff appointed on the same day would be applicable to the staff of the Railway Company, and previous service under the Raihvay Company would not count for the purpose of seniority.

It appears from the statement of respondents 4 and 5 that when the undertaking was actually taken over on January 1, 1954, about 77 per cent. of the staff of the Railway Company were re-employed on the same scales of pay, about 23 per cent. were re-employed on somewhat lower scales of pay though the pay which they actually drew at the time of re-employment was not affected ;. only about 24 of the former employees of the Railway Company declined service under the Government. Soon after, respondent No. 1 filed some sixty-one applications on behalf of the erstwhile workmen of the Railway Company under s. 15 of the Payment of Wages Act, 1936, for payment of retrenchment compensation to the said workmen under cl. (b) of s. 25F of the Industrial Disputes Act, 1947 (hereinafter called the Act). The applications were made to respondent No. 3, Civil Judge (Jw1ior Division) Madha, who was the relevant authority under the Payment of Wages Act, 1936.

These applications were contested by the present appellants and several issues were framed. Three of the issues were-(1) whether the authority under the 1956 Hariprasad Shiv- s&mk1Jr Shukla v. A. D. Divikar S. 1i·. Das J. 1956 llariprasad SIU,,.. shonkar Shuk. ld v . . A. D. Diuikar S. Jr. Das ]. 126 SUPREME COURT REPORTS [1957] Payment of \Vages Act, 1936, had jurisdiction to deal with and adjudicate on the claim of retrenchment compensation ; (2) whether the erstwhile workmen were entitled to claim compensation under clause (b) of s. 25F of the Act; and (3) whether they had been 'retrenched' by their former employer, the present appellants, on December 31, 1953, within the meaning of the expression 'retrenchment' in the Act. The Civil J u ection is so widely interpreted as to include a closure· of business.

The restriction, it is submitted, is not a reasonable restriction in the interests of the general public, because (a) it is unrelated to the capacity of the employer to pay and (b) unrelated to the needs of the employee. From the other point of view, the argument is that even in respect of a running or continuing industry, s. 25F imposes an un- reasonable restriction. Reasonableness, it is submitted, has to be considered with regard to the object of the legislation and if the direct and immediate object of s. 25F is relief against involuntary unemployment, then the restriction imposed is excessive, because a provision for such relief unrelated to the period of unemployment and other relevant factors is over-simplification of a complex problem. Such over-simplification, it is stated, itself amounts to an unreasonable restriction. On the construction which we have adopted of the definition clause and of s.

25F of the Act, we are relieved of the task of making any final pronouncement on this constitutional question. On our construction, s. 25F has no application to a closed or <lead industry an<l the constitutional arguments based on a different construction nec<l not be considered in these appeals. So far as a running or continuing industry is concerned, an obvious answer may be that unemployment relief is not the only purpose or object of s. 25F. We have pointed out S. C. R. SUPREME COURT REPORTS 143 earlier that it is reasonable to assume that standardisa- tion of retrenchment compensation an<l doing away with a perplexing variety of factors for granting retrenchment compensation may well have been the purposes of s. 25F, though the basic consideration must have been the granting of unemployment relief. However, on our view of the construction of s. 25F, no compensation need be paid by the appellants in the two appeals.

It is unnecessary therefore to decide whether, in other cases of a different character, s. 25F imposes a reasonable restriction or not. In the result, we must allow the two appeals and set aside the decisions of the High Court of Bombay in the two cases. We hold that the appellants in the two appeals are not liable to , pay any compensation under s. 25F of the Act to their erstwhile workmen who were not retrenched within the meaning of that expression in that section. In the circumstances of these two cases, the parties must bear their own costs through- out. Appeals allowed. BANARAS ICE FACTORY LIMITED v. ITS WORKMEN (S. R. DAs C. J. , BHAGWATI, Vi;:NKATARAMA AYYAR B. P. SINHA and S. K. DAs JJ) Industrial Dispute-Appeal pending before Labour Appellate Tribunal-Closure of factory-Termination of se1·vices of workmen without permission of the Tribunal-Legality-"Discharge", meaning of-Industrial Disputes (Appellate Tribunal) Act, 1950 (XLVlll of ]950), SS. 22, 23. Clause (b) of s.

22 of the Industrial Disputes (Appellate Tribunal) Act, 1950, provides that during the pendency of any appeal under the Act no employer shall discharge any workmen concernetl in such appeal, save with the express permission in writing of the Appellate Tribunal, and s. 23 enables any employee to make a complaint in writing to such Appellate Tribunal if the employer contravenes the provisions of s. 22 during the pendency of proceed- ings before the said Tribunal. 1956 Hari;rasad Shiv· shankar Shukla v. A. D. Divikar S. K. Das ].

Source: Supreme Court eSCR. Dataset: Dattam Labs, CC BY 4.0. Text extracted automatically; compare with the source PDF for layout and accuracy.